AXA rises to CBA challenge

The battle for self-managed super funds is heating up as
AMP
’s AXA prepares to compete head on with
Commonwealth Bank of Australi
a in recruiting accountants, who have become the so-called gatekeepers of the $420 billion sector.

AXA, which was acquired by AMP earlier this year, has launched a new licensee service, SMSF Advice, and is scouting the industry for accountants who may want to join the brand and provide advice to do-it-yourself super funds.

“We intend to go out and recruit financial planner-based accountants or accountants who are already in public practice and who want to be under the AXA brand," AXA national development manager for SMSF Advice Kath Bowler said. “We have actually had a lot of interest from within our market."

It is estimated that of the 460,000 funds in operation, 84 per cent use an accountant and only a small percentage use a financial planner.

AXA’s new service comes just over a month after CBA agreed to acquire financial planning and accountancy firm
Count Financial
for $373 million. At the time, CBA said Count’s strong accounting presence in DIY super was the rationale behind the deal, which is still pending approval from the Australian Competition and Consumer Commission.

Large financial institutions are increasingly on the hunt for accountants or accountancy-based financial planners, which is fuelling industry concerns about the impact that may have on the accounting profession and the level of independent advice provided to clients.

“I don’t think it is the death of the suburban accountant but it certainly means that some of the larger firms are looking to further protect their future business," said CPA Australia head of business and investment policy Paul Drum.

SMSF Advice, which as been in development for 18 months, in effect allows fund manager AMP to build on its presence in DIY super – the fastest growing sector in retirement savings with 30,000 funds established each year.

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Andrea Slattery, chief executive of industry group the Self Managed Super Fund Professionals’ Association (SPAA), welcomed AXA’s SMSF licensing service and said she believed more would follow.

Accountants are now only allowed to provide advice to people wanting to set up a SMSF under an exemption in the Financial Services Reform Act.

But as part of reforms to the financial advice industry, the federal government has proposed allowing accountants to provide basic financial advice to DIY funds if they hold a licence or are authorised through another licence holder.

CPA Australia has urged accountants to hold off on signing up with new licensees until more is known about the scope of advice that accountants can provide.

“We are saying think twice and look before you leap because the government’s policy settings regarding the removal of the accountants’ exemption is yet to be finalised," Mr Drum said.

Details on the accountant’s exemption are expected to be made clearer over the next two weeks when the third tranche of draft legislation on the Future of Financial Advice reforms is released.

AXA’s SMSF Advice service will cover three options for accountants, from basic set-up advice to comprehensive and product-related advice. The latter will be more expensive. “Advisers who join SMSF Advice will only be charged a flat fee and in turn they have to charge their clients a fee in line with their professional standards," Ms Bowlers said.

The service allows AXA to build on its SMSF offering after it acquired administration firm Multiport in 2009.